In the State of the Union address, President Obama proposed that Congress should raise the federal minimum wage in stages from $7.25 to $9.00 by 2015. He also proposed continuing to raise the minimum wage based on the cost-of-living index. Raising tipped wages were also part of his proposal.

The National Restaurant Association (NRA) has traditionally opposed minimum wage increases. The NRA provides its own minimum wage overview and explains that restauranteurs must deal with the following challenges to stay solvent:

Impact of healthcare law

Rising food costs

Higher energy costs

Now on top of these concerns ― they face higher minimum wages. The NRA claims that based on the nature of the restaurant industry, raising the minimum wage will impair restauranteurs’ abilities to hire workers. Unlike some other industries, restaurants have high labor costs. Approximately 33 percent of restaurant sales go to cover labor. The pretax profit margin for a restaurant is generally around three to five percent. Most restaurant employees earn above the minimum wage. The statistics quoted in the article indicated that 80 percent of workers who earn the starting wage work part-time, and 70 percent are under age 25 and 46 percent are teenagers.

Stephen Hans of Hans & Associates, P.C. is a New York employment defense lawyer who for more than 30 years has provided affordable legal services to small and medium-sized business owners throughout Queens and New York City.